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Barry Soper: NZ like the Cayman Islands of the Pacific

5 Apr, 2016 5:00am

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An international collection of journalists published a report on the financial activities of a dozen current and former world leaders that said associates of Russian President Vladimir Putin have moved as much as US$2 billion through offshore accounts. Source: ICIJ

John Key has talked in the past about the possibility of God's Own becoming the Switzerland of the South Pacific.

Fact is, it seems we already are but not in the way he envisaged it, it would seem, even though he reckons the 12,000 companies and individuals who've decided to establish trusts here, to channel money elsewhere, are above board.

The PM refuses to accept we're more like the Cayman Islands of the Pacific, saying our rules of disclosure of where the money's coming from and where it's going to are strong enough. Why? Because the OECD club of western nations gave us a clean bill of health.

And besides, he reminded us, the trust law came into being in 1988, and we know who had his hands on the economic tiller then, the man Key refused to have in his Cabinet, Roger Douglas.

Key on the trusts sounded a bit like a cracked record, repeatedly telling us how complex the issue was and directing us to ask the IRD.

So what's the attraction of setting up a trust in this country, well they're many and varied he tells us? They might not, for example, like the third country they're doing business in.That's probably why a Cabinet Minister from Malta's got a trust here and is doing business in the dodgy Panama.

Key talked a lot about tax treaties with other countries which require more disclosure, but we don't have one with Panama or Malta.

It doesn't take a rocket scientist to realise money's being moved around the globe by the rich and famous, and other nefarious characters, to dodge tax. But it does take a tax specialist to remind us how lax our law is.

Professor Michael Littlewood, from Auckland University's been quoted as suggesting you could drive an armoured, cash carrying truck through the law in this country.

Lawyers are expected to tell the IRD of a trust's existence here but that's all. They don't have to tell the tax collector who's behind the trust, what its income is, what country it's from or the nature of the assets or who the beneficiaries are.

So it's open slather and because the trust doesn't pay tax here the IRD's not particularly interested.

And besides trusts are little more than the buffet car on the gravy train for those who're drawing them up, earning up to $50 million a year.

Winston Peters has clearly been wallowing in reminiscences of his winebox of old, declaring dirty money's being washed through this country to evade tax and to hide other serious financial and taxation manipulation.

He's accusing Key of shaking hands with devious financial operators around the world while at the same time promoting our tax system but doing little prevent us now being known as one of the world's quiet tax havens.

He's accusing him of taking a spray and talk away attitude which is presumably a reference to the Asian man with a heavy accent promoting a mould remover. There has got to be an association with tax dodging trusts there somewhere, hasn't there?

The more obvious one though is the fact that when he was Treasurer after the trust law came in, he did nothing to change it before he was sprayed by Jenny Shipley and was forced to walk away!